Midday Commentary: Bonds widen in early trading; Yum! Brands, SunTrust tighten from issuance

By Cristal Cody

Tupelo, Miss., Oct. 23 - Investment-grade bonds traded marginally wider Wednesday with the market out about 1 basis point to 2 bps overall in early trading, according to sources.

In the secondary market, Yum! Brands Inc.'s senior notes (Baa3/BBB/) tightened from where the two-part offering priced on Tuesday, a trader said.

"They're wider from the close yesterday, but from where they broke, they're performing better," the trader said. "They've widened a little bit along with everything else."

Union Pacific Corp.'s 4.75% 30-year senior notes eased about 1 bp early in the day.

SunTrust Banks, Inc.'s 2.35% senior notes due 2018 traded about 4 bps tighter from where the issue priced on Tuesday, according to a trader.

Elsewhere in the financial sector, Citigroup Inc.'s new 10-year notes, which were sold on Monday, remain wider but "have stabilized a little bit" and traded unchanged from Tuesday, a trader said.

Yum! Better

Yum! Brands' 3.875% senior notes due 2023 traded at 138 bps bid, 136 bps offered during the morning session.

The company sold $325 million of the notes at a spread of Treasuries plus 140 bps.

The tranche of 5.35% senior notes due 2043 traded at 166 bps bid, 164 bps offered early in the day. Yum! Brands sold $275 million of the bonds at 170 bps over Treasuries.

The quick service restaurant operator is based in Louisville, Ky.

Union Pacific eases

Union Pacific's 4.75% 30-year senior notes (Baa1/A-/) eased in early trading to 111 bps bid, 109 bps offered, according to a trader.

Union Pacific sold $500 million of the 30-year bonds with a spread of Treasuries plus 110 bps on Tuesday.

The railroad transportation company is based in Omaha.

SunTrust firms

SunTrust Banks' 2.35% senior notes due Nov. 1, 2018 (Baa1/BBB/BBB+) firmed to 104 bps bid, 100 bps offered early Wednesday, a trader said.

The Atlanta-based financial services company sold $750 million of the notes at a spread of Treasuries plus 108 bps.

Citigroup stabilizes

Citigroup's 3.875% senior notes due 2023 (Baa2/A-/A) traded wider than issuance at 137 bps bid, 136 bps offered early Wednesday but are unchanged from Tuesday afternoon, a trader said.

Citigroup sold $2 billion of the notes at a spread of Treasuries plus 130 bps on Monday.

The financial services company is based in New York.

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